What Does the Future Look Like for Colleges? Fewer Students and Fewer Campuses, Due to Previous Events

Demographers say it will finally reach the rest of the country in the fall of this year. That’s when recruiting offices will begin to face the long-awaited drop in the number of applicants from the next class of high school seniors.

But the recession is not just a problem for universities and colleges. It’s an economic crisis, as fewer graduates end up coming through the pipeline to fill jobs that require a college education, as international competition increases the number of people with degrees.

“The impact of this is the recession,” said Jeff Strohl, director of the Georgetown University Center on Education and the Workforce.

As new data emerges, the outlook gets worse. An analysis by higher education consulting firm Ruffalo Noel Levitz, using the latest available census figures, now predicts another decline in the number of 18-year-olds starting in 2033, after a bit of research. By 2039, the estimate shows, there will likely be 650,000, or 15%, fewer of them per year than now.

These findings agree with another new report, released in December by the Western Interstate Commission for Higher Education (WICHE), which states the number of 18-year-olds across the country who graduate from high school each year – and therefore will attend college. – will erode by 13%, or about half a million, by 2041.

“A few hundred thousand a year may not sound like a lot,” Strohl said. “But multiply that by ten years, and it has a huge impact.”

Fewer students means fewer colleges

This comes after colleges and universities collectively saw a 15% drop in enrollment between 2010 and 2021, the most recent year for which statistics are available, according to the National Center for Education Statistics (NCES). That includes a drop of more than 350,000 students in the first year of the pandemic alone, and means there are 2.7 million fewer students than at the beginning of the last decade.

In the first half of last year, more than one college a week announced they would close. Another new study, from the Federal Reserve Bank of Philadelphia, projects that the pace of college closings may now accelerate.

Not all stories are bad. For students, it means a buyer’s market. Colleges and universities are, on average, accepting a larger share of their applicants than 20 years ago, a new study by the American Enterprise Institute finds. And tuition, when adjusted for inflation, is falling, according to the College Board. (Housing and dining costs continue to rise.)

Ripple’s effects on the economy

The possible closure of many colleges is in itself a threat to the economy. About four million people work in higher education, NCES reports. Although high-risk colleges tend to be small, all closings translate, on average, to 265 job losses and $67 million a year in economic impact, according to the economics and analytics software company Implan.

Although the decline in the number of 18-year-olds has been widely discussed in terms of its effects on colleges and students, the effects are much broader, however.

“In an economy that depends on skilled workers, we’re falling apart,” said Catharine Bond Hill, an economist, former president of Vassar College and managing director of the higher education consulting firm Ithaka S+R.

He points out that, based on NCES data, the United States has dropped to ninth place among developed nations in the number of its 25- to 64-year-olds with any postsecondary degree.

He says: “We have to aim for No. 1, and it is not.

The shrinking supply of young people will contribute to a “major labor shortage,” with an estimated 6 million fewer workers by 2032 than there are jobs to be filled, according to labor market analysis firm Lightcast.

Not all of those jobs will require a college education. But many will do that. Forty-three percent of them will need at least a bachelor’s degree by 2031, according to the Georgetown campus. That means more jobs will require some type of postsecondary education than most Americans are expected to obtain.

An unpublished study underway at Georgetown predicts major shortages in teaching, health care and other fields, as well as some level of skills shortages in 151 occupations, Strohl said.

He says: “If we don’t keep our motivation in innovation and teaching at the college level, we will have a recession and eventually the standard of living will decrease.”

Labor shortages are already hampering efforts to expand the US semiconductor industry, for example, consulting firm McKinsey & Company warns. It’s a big reason that production at a new $40 billion semiconductor processing facility in Arizona has been delayed, according to the parent company.

The massive labor shortages expected to occur in the future have not been seen since the years following World War II, when the number of young men was decimated by death and disability, Strohl and others said. And this labor shortage is accompanied by a wave of retirements among experienced and educated baby boomers.

Lots of complex math stuff

“It’s an amazing time in our history,” said Luke Jankovic, vice president and general manager at Lightcast. “We have too many people moving from economic producers to economic consumers, and not enough people coming behind them to change.”

The declining number of 18-year-olds is compounded by other problems, including a sharp drop in the number of Americans in the labor market – especially baby boomers who are retiring early and men missing out on drug abuse or incarceration. The number of men age 20 and older in the workforce has dropped from about 76% at the start of the Great Recession to about 70% today, the Bureau of Labor Statistics reports.

The decline in high school graduates by 2041 is expected to be worse in the Northeast, Midwest and West, where interest rates have fallen more than other regions, and where fewer families have moved. In total, 38 states will see declines, WICHE estimates, some of which are steeper than the national average: 32% in Illinois, 29% in California, 27% in New York, 20% in Michigan, 17% in Pennsylvania.

In areas where the number of high school graduates remains stable or increases, for now, it will be because of one group: Hispanic students. The number of Hispanic high school graduates, nationwide, is expected to increase from 26% to 36% by 2041.

But Hispanic college attendance is below the national average and has been declining, US Department of Education statistics show.

All of these things present “a combination of factors that we haven’t seen before,” said Emily Wadhwani, a senior director at credit rating firm Fitch who specializes in higher education.

Concerns about the value of a college education

Enrollment declines, on the other hand, have been exacerbated by a decline in the perceived value of college or university degrees. One in four Americans now say that having a bachelor’s degree is very important or very important to getting a good job, according to the Pew Research Center.

Among high school graduates, the proportion going directly to college has declined, from a peak of 70% in 2016 to 62% in 2022, the most recent year for which this figure is available.

The only thing that will restore stability to the higher education sector, says Wadhwani, is “a renewed sense that it’s worth it.”

Demarée Michelau, president of WICHE, calls these situations, “the most frustrating problems for higher education planners and administrators in our generation.”

There are other college customers, of course, including international students, students older than 18 and graduate students.

But these other sources may not be enough to cover the coming decline, experts say.

Now that Donald Trump is about to begin a second term as president, 58% of European students say they are not interested in coming to the United States, according to a survey conducted in October and November by international student recruitment group Keystone Education Group.

And despite colleges’ efforts to recruit students over 25, their numbers have halved since the Great Recession, the Philadelphia Fed estimates. Many older students say they are discouraged by the cost or have families and jobs, colleges that don’t last, or they start college but drop out and don’t have the motivation to go back.

On Iowa Wesleyan’s campus, the old gymnasium was stripped of wood and anything else of value and demolished. The cornerstone fell into a pile of rubble. It had the college’s founding date: 1842.

“In many of these towns, their ownership is inextricably linked to the college that has been around forever,” said Doug Moore, the man overseeing the liquidation. “It is a great source of local pride. And it is a great source of good paying jobs that cannot be replaced.”

The closing process, he adds, is “cruel and painful.”

And yet you know that in the coming years, many colleges and universities will likely go under the salesman’s gavel and wrecking ball:

“You have a lot of variables” facing colleges and universities. “Commodity and demand. You must change and reform, or die. “